FOREX-Dollar mostly flat as market eyes US data slew

(Recasts first paragraph, updates prices, adds comment and quotes; changes dateline, previous LONDON, byline)

By Jamie McGeever

NEW YORK, March 13 - The dollar was little changed on Monday, unable to draw sustained support from last week's strong U.S. jobs report as traders braced for a heavy batch of economic data this week.

The dollar's inability to extend these gains -- the euro is now exactly where it was before the Labor Department announced the stronger-than-expected rise in February U.S. nonfarm payrolls on Friday -- suggests future interest rate increases may already be factored into the dollar.

"I think this is a sign that the market remains disproportionately sensitive to downside surprises in U.S. data as opposed to the upside, given how much (Fed rate hikes) is already priced in," said Daniel Katzive, currency strategist at UBS in Stamford, Connecticut.

Some analysts say the euro drew some support from news that the United Arab Emirates' central bank is considering putting more of its reserves into euros.

The euro was up 0.1 percent against the dollar at $1.1921 <EUR=>. The dollar was up a little against the yen at 119.11 yen <JPY=> and was off a touch against the Swiss franc at 1.3156 francs <CHF=>.Sterling was flat at $1.7260 <GBP=>.

Certainly, there are several major U.S. economic reports for traders to get their teeth into a data-heavy week that could have an impact on U.S. interest rate perceptions, starting with fourth-quarter current account data and February retail sales due for release on Tuesday morning.

Other highlights include January's capital flows data on Wednesday and consumer price inflation on Thursday.

Interest rate markets and Wall Street economists generally expect the Federal Reserve to raise its federal funds rate to at least 5 percent this summer from 4.5 percent currently.

EURO CROSS FIRE

The euro on Monday hit a one-month high against the yen, a seven-month high against sterling and a two-year high against the Swiss franc supported by the UAE central bank statement.

On Sunday, the UAE central bank said that it was looking to convert up to 10 percent of its foreign exchange reserves from dollars into euros -- double the target it had previously set. The reserves are estimated at $23 billion in December and are held almost entirely in dollars.

But not many analysts think the story will have much lasting weight on the market.

"If this was an important story, you'd expect to see it in euro/dollar," said Ken Landon, senior currency strategist at JP Morgan Chase in New York.

"In nature, there's nothing really new about it. It's something short-term traders might latch on to but I don't expect it to have any real impact," Landon said.